E-kanban for kanban procurement: what is it and how it works

The kanban system has revolutionized internal material management, bringing order, visibility, and continuous flow to business processes. But if kanban works so well within the company, why not extend its benefits to external suppliers as well? 

This is where e-kanban for kanban procurement comes into play: a digital approach that allows procurement processes with suppliers to be automated and simplified, perfectly integrating them into the company’s flow. 

The limits of traditional kanban in procurement 

In a traditional kanban system, whenever a bin is emptied, the operator places the corresponding physical kanban card on a kanban board. From there, the manual process is the following: 

The procurement officer periodically collects the kanban cards (one or more times a day) from the kanban board
Manually types the orders on the computer and sends them via email, one by one, checking quantities, prices, and minimum lots each time
Communicates by phone or email with the supplier for any confirmations, negotiations, or follow-ups
Procurement officers have no visibility on the status of the order unless they directly contact the supplier (assuming the supplier can provide an accurate and updated answer).
As the list suggests, this is a system that requires a lot of time and proactivity from personnel to manage, and for this very reason, it is prone to delays and errors, limiting the efficiency of the entire purchasing process. 

What is e-kanban for kanban procurement 

With an e-kanban system, or electronic kanban, everything changes. An electronic kanban system is a manual kanban system enhanced by the integration of specific software, called electronic kanban or e-kanban, that digitizes the information flow of the manual kanban system. 

In an electronic kanban system: 

• When bins are empty, kanban cards are no longer manually collected but scanned using handheld devices or other scanners 
• The scan generates a signal sent to the software, indicating that the kanban has been consumed and must be replenished 
• The software generates a new kanban card, which the operator of the supplying process can view by accessing the software. Once the material is ready, the operator prints and applies the new kanban card to the bin of the replenished material. 

This process of signal transmission and replenishment remains the same whether the supplier is an internal process or an external one. 

In this case, the purchasing manager agrees in advance with each supplier on the supply conditions (quantity, price, minimum lot, lead time), and when the operator scans the card of the emptied bin, an order is automatically generated and sent to the supplier—as long as the agreed number of cards to be replenished has been reached. Otherwise, the card will be marked as consumed but pending accumulation. 

Once the order is transmitted, it is displayed in real time on a digital board shared with the supplier (each supplier can only see their own orders, not those of other suppliers managed through the same software), who can: 

• Take charge of the order 
• Update its status (in progress, shipped, delivered) 
• Add comments or report problems directly on the board, attaching notes or negotiation proposals to the specific kanban card. 

The benefits of e-kanban for kanban procurement 

As the previous example shows, adopting an e-kanban system for kanban procurement means you can: 

• Eliminate manual order management with third parties 
• Reduce errors 
• Shorten lead times (the supplier can see how many cards the customer has in accumulation and prepare in advance to fulfill incoming orders) 
• Have complete and real-time traceability of every order’s status and all materials managed through the e-kanban system 
• Improve collaboration and transparency with suppliers 
• Increase the reliability of the entire supply chain. 

Bringing the benefits of kanban into purchasing management 

E-kanban is the natural evolution of traditional kanban: it transforms a manual system into a digital, connected, transparent, and responsive process. Extending kanban to external suppliers through e-kanban means purchasing with kanban triggering a virtuous cycle that improves material flow, reduces waste, and makes the supply chain leaner and more resilient. 

If your company has already experienced the benefits of kanban in production, the next step is clear: extend kanban to kanban procurement as well.